Construction Financing – When Costs Are Running but Milestone Payments Lag Behind
Construction is a masterclass in cash flow management. A contract can span 18 months, but materials and wages must be paid immediately — while the client only pays based on completion milestones. Don't let a cash gap shut down the job site. Trusty understands contract-based accounting. Our AI CFO analyzes your project's payment schedule and cost structure to find a solution that bridges the interim and frees up capital locked in retention guarantees.
The Three Biggest Cash Drains in Construction
1. Front-Loaded Costs (Cash Gap)
Materials, subcontractors, and wages must be paid monthly. The client may not release the next milestone payment for another three months, pending phase approval. Bridging that gap requires financing.
2. Guarantees & Retentions
Construction contracts typically require 5–10% in guarantees (performance bonds, warranty bonds). If that money sits pledged in a bank account for years, it can't be used to start new projects.
3. Heavy Equipment
Excavators and cranes are costly investments. Purchasing them outright drains the cash reserves needed for day-to-day operations.
Trusty's Toolkit for the Job Site
1. Project Financing (€100k–€10M)
Tailored financing for individual contracts or developments.
- How it works: Funding is drawn down in line with costs and repaid when the client pays milestone installments or the property is sold.
- Trusty's approach: We align repayments to your project's payment schedule.
2. Invoice Financing (Turn Milestones into Cash)
When you finally get to invoice a milestone, the client may still have 30–60 days to pay.
- Solution: Invoice financing converts an approved milestone payment into cash immediately. This is vital on long-duration projects.
3. Equipment Leasing (Heavy Machinery)
Don't lock capital into iron.
- Solution: Finance excavators, telehandlers, and vans through leasing. Gain tax advantages (depreciation/expense deductions) while the equipment itself serves as collateral.
4. Guarantee Insurance (Free Up Your Pledges)
Is your money tied up in bank guarantees?
- Solution: Trusty can source insurance companies that issue guarantee bonds for a small annual premium.
- Benefit: Release the cash sitting in pledge accounts and put it back to work in your business immediately.